Impairment charges on US cereal business Post, caused by a worsening in the sales and earnings outlook for the division, has led owner Ralcorp Holdings to report annual losses of US$187m.

The company, which plans to spin off Post from its core private-label operations by the end of the year, had delayed the publication of its annual results by three weeks due to an analysis of the branded cereal division.

Ralcorp reported its full-year numbers yesterday (29 November) and recorded impairment charges of $471.4m. The group said falling sales from Post in the fourth quarter - which ran until 30 September - and into October, plus "weakness" in the branded, ready-to-eat US cereal category - had led the new company's management to conclude that "additional strategic steps" were needed to "stablise the business".

Ralcorp added: "The impact of these steps is to reduce expected net sales growth rates and profitability of certain brands in the near term, thereby resulting in the goodwill and trademark impairments."

The impairment charges led to Ralcorp booking an annual loss of $187.2m, compared to net income of $208.8m a year earlier. The costs also weighed on operating profit, which slumped from $421.9m a year ago to $29.8m.

Ralcorp made a net loss of $370.1m in the fourth quarter, compared to net income of $41.9m a year ago. It recorded an operating loss of $357m for the fourth quarter. A year earlier, Ralcorp reported a fourth-quarter operating profit of $88m.

The group's top line did improve during the year. Net sales increased 17.1% to $4.74bn. Fourth-quarter net sales were up 8% at $1.22bn. The growth in sales was driven by a full-year's contirbution from pasta firm American Italian Pasta Co., which Ralcorp acquired last July. However, sales of Ralcorp's own-label cereals, snacks, sauces and spreads and frozen bakery products did increase.

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